Gas

24-12-2013-10-43-06-AM.png

The gas supply chain links gas producers with consumers. Gas is extracted from gas basins by producers. It is delivered across transmission and distribution networks, some of which are operated by monopoly businesses. Retailers compete to offer energy services to consumers.

Gas is used as a fuel by some electricity generators. Because it can be stored in reservoirs and pipelines it is a resource which enhances the security of energy supply.

Production

Natural gas is produced in a number of conventional natural gas and coal seam gas (CSG) fields across Australia. Geology dictates the location of gas fields which are not necessarily close to demand centres. Gas fields are located both onshore and offshore.

In some instances, gas is produced for export by ship as liquefied natural gas (LNG). In this case, transmission pipelines transport the natural gas to an LNG processing facility near a port.

Producers sell gas domestically to energy retailers, electricity generators and other large gas users.

Transmission and distribution

The gas produced for domestic consumption is transported (or ‘shipped’) by high pressure transmission pipelines from the production facility to the entry point of the distribution network (known as the city gate) or to large users that are connected to the transmission pipeline.

Gas entering the distribution system is then transported under lower pressures to the end user’s delivery point (or consumer’s supply address). Retailers arrange with gas distribution network operators for the supply of gas to end users via the distribution network.

Like electricity transmission and distribution systems, the significant sunk investment in gas pipelines means that for a particular location it is efficient for gas pipeline services to be provided by a single entity. However, the interconnection of many of the transmission pipelines in southern and eastern Australia creates competition between pipeline operators for their services.

Depending on the degree of competition that exists for their services, some transmission pipelines and most distribution networks are subject to economic regulation. This results in information on price and non-price terms and conditions of access to the pipeline being available to users and potential users.

Regulatory decisions are made on a pipeline-by-pipeline basis and are usually made at five-yearly intervals.

Retail

The retail sector of the supply chain is competitive, allowing consumers to choose to purchase their gas from a growing group of energy retailers.

Retailers generally buy wholesale gas from producers under bilateral contracts. They package it with transportation charges for sale to consumers.

The arrangements between retailers and their customers are regulated under general consumer law and the National Energy Customer Framework (NECF), although the National Gas Rules and subsidiary Retail Market Procedures include the arrangements for customer connections, customer switching and balancing and reconciliation that support retail competition.